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28 March 2013

Property Barometer - Emigration and Foreign buyingFNB - South AfricaCONCLUSION
In short, therefore, with regard to emigration selling of local property we still do not appear to be seeing any negative impact (increase) from recently heightened domestic tensions. But it is important to understand that our “brain drain” problem has probably NOT permanently subsided. In different (better) global economic times, the negative impact may have been far more significant, as was the case in various historic periods of weak sentiment towards SA.

In terms of foreign buying of domestic residential property, foreign buyers from the African continent appear to have been a key driver of some mildly improved foreign buying levels since 2010. However, a slight decline in this group’s share of total foreign buying reminds us that this source of investment is not guaranteed. As Africa’s household wealth grows strongly, South Africa can stand to benefit handsomely. But with that growth in wealth comes a growth in greater investment and employment alternatives for this group elsewhere on the African Continent, introducing greater competition for African purchasing power and skills.Property Barometer - Emigration and Foreign Buying Mar 2013

'Check the zoning laws before you buy a property to rent'Iolproperty - South Africa
Investing in a property with the intention of renting it out to students can be lucrative, particularly if it's close to a university or college that provides a constant stream of tenants.

However, Mike Greeff, chief executive of Greeff Properties, warns that would-be investors need to ensure the property is correctly zoned or they could face severe consequences.

Greeff 's warning follows a judgment in favour of Stellenbosch Municipality, which was granted an application for an interdict to prohibit a property owner from offering student accommodation when the property zoning allows for a dwelling house to be occupied by only one family. It held that the owner was required to obtain permission from the municipality or face penalties.Iol.co.za

Property Barometer - Activity Level by SegmentFNB - South AfricaCONCLUSION
Therefore, in short, when examining the FNB Estate Agent Survey by Income segment, we continue to see the Lower Income segment’s sample of agents being more upbeat on demand than the segments further up the income/price ladder. However, that demand gap between the lower and higher end has been noticeably closing, as the Higher Income segments play catch up.

There appears good reason for this “catch up” by the higher end segments, because as time passes the level of downscaling due to financial pressure (something that has benefited the Lower End more in the recent past, arguably) is subsiding, while the level of selling in order to upgrade out of the Lower Income segment appears to have been on the rise (benefiting segments higher up).

Apart from this, the lengthy period of low and stable interest rates in recent years, along with sustained positive economic growth since 2009, has perhaps begun to lower perceptions of risk (rightly or wrongly) in the eyes of home buyers.

Nevertheless, while such a catch up in demand by the Higher End should ultimately translate into a narrowing in the gap in “market balance” indicators such as Average Time on the Market and percentage of sellers having to drop their asking price to make the sale, this has not been too noticeable yet, with the Lower Income Segment is still showing noticeably better levels in this regards. In addition, stock constraints reported by agents still seem most significant in the Lower Income segment. So, while agents appear to be reporting higher income segments starting to “come to the party” and narrow the performance gap, the Lower Income Area segment still records the best performance, for the time being, in key areas of the FNB Estate Agent Survey.FNB Property Barometer_Home Buying by Segment

Growth in industrial rentals heating up, but we’re not out of the woods yetRode - South Africa
The growth in industrial rentals is slowly heating up, seemingly benefiting from the lagged impact of declining industrial property vacancy rates.

Evident from the graph which follows is the strong inverse relationship between vacancies and rental growth – exactly as one would expect. Note also how vacancy rates on warehouse and high-tech property dropped during 2010 and 2011, and how since 2011 the growth in prime industrial rentals has heated up. In fact, such has been the acceleration in the growth of rentals that in the fourth quarter of 2012, prime industrial rentals recorded a nationally averaged growth rate of 7%. Disappointingly, this growth failed to be in excess of building-cost inflation, implying that we are, as yet, not out of the woods when it comes to industrial property.Rode.co.za